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LAYER FARM
(5000 Birds)
April, 2002
Pre-Feasibility Study Layer Farm (5000 Birds)
DISCLAIMER
The purpose and scope of this information memorandum is to introduce the subject
matter and provide a general idea and information on the said area. All the material
included in this document is based on data/information gathered from various
sources and is based on certain assumptions. Although, due care and diligence has
been taken to compile this document, the contained information may vary due to any
change in any of the concerned factors, and the actual results may differ substantially
from the presented information. SMEDA does not assume any liability for any
financial or other loss resulting from this memorandum in consequence of
undertaking this activity. Therefore, the content of this memorandum should not be
relied upon for making any decision, investment or otherwise. The prospective user
of this memorandum is encouraged to carry out his/her own due diligence and gather
any information he/she considers necessary for making an informed decision.
The content of the information memorandum does not bind SMEDA in any legal or
other form.
DOCUMENT CONTROL
Document No. PREF-19
Revision 1
Prepared by SMEDA-Punjab
Approved by GM Punjab
Issue Date April, 2002
Issued by Library Officer
1 INTRODUCTION
Layer farming is a profitable business as the produce of the farm provides high
quality animal protein which is daily requirement of the human body. Animal
Protein is more valuable than that of plant protein.
The average availability of protein is 11 grams a day, which is far less than the
recommended daily dietary protein consumption of 26 grams according to the World
Health Organization standards.
15
10
5
0
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
The figure above shows the shortage of protein availability in the country. The
demand for eggs is increasing with the increase in the population.
The following table shows the per capita consumption of eggs and poultry meat in
1999:
Layer Population(1992-2000)
16.0
Population (Mill. Birds)
14.0
12.0 14.0 13.6 13.6 13.9
10.0 11.7 11.5 12.0
10.6 10.2
8.0
6.0
4.0
2.0
0.0
1992 1993 1994 1995 1996 1997 1998 1999 2000
3 MARKETING
Layer starts giving eggs at the age of 15 weeks. Usually, layer farm is recommended
to start in the month of February or March. The layer is ready to lay eggs in
July/August. The demand for eggs is increased during the winter season and, as a
result of that, the prices of eggs are also increased.
Weighted average sale price at the farm gate for the year has been taken as Rs.21 per
dozen eggs sold.
Eggs are packed in trays and can be sold in bulk to the wholesale markets in the
urban cities. The eggs are more liable to be damaged during transportation. The
profits and losses in marketing of eggs depend on the proper transportation methods.
Eggs should be transported in proper containers. Bamboo baskets, wooden boxes,
and pitch board trays, collapsible cardboard boxes and in plastic trays are the
containers used for transporting eggs. Of these, Bamboo baskets and wooden boxes
are the safest way.
Retail buyers are also available who will directly purchase eggs from the farm. Egg
is perishable commodity and cannot be stored for longer period of time. The shelf
life of egg is short during summer (1 week) and long in winter season (4 weeks).
4 FARM MANAGEMENT
4.2 Brooding
Proper brooding temperature is required to keep the chicks in comfort during rearing
period when they are sensitive to cold and need some artificial heat source to
maintain their normal temperature. Coal or sawdust is burnt for supplying heat at the
stage of brooding in the poultry farm.
The pre-feasibility study has taken brooding expense at Rs 1 per bird during the
rearing period.
4.3 Feeding
The requirement of feed during laying depends on the rate of egg production and the
body weight of layer birds. The birds may need more feed in winter and less feed in
summer. During summer months the flock is under severe stress then it is suggested
to temporarily change the ration to a higher level of protein content. The actual feed
consumption may be influenced by several factors as follows:
• Body weight of the bird.
• Rate of egg production.
• Season and weather condition.
6
4.4 Housing
The poultry house should be well ventilated, reasonably warm in winter and cool in
summer. The poultry house should be cheap, durable, comfortable and safe. Each
bird should be provided a floor space of about 2 sq. ft.
4.5 Feeders
It is essential to provide adequate feeder space. Ideally, two pan type feeders are
sufficient for 50 birds. Therefore, for 5000 birds, 200 feeders are enough.
4.6 Lighting
Light affects growth and reproduction of poultry birds by different physiological
actions. The duration of the light period should not be decreased during laying
period. Adequate lighting boosts up egg production by 5 to 10 percent. Lighting
encourages the birds to eat more feed, more of which will lead to better growth and
more eggs production. Irregular lighting results in drop in egg production.
4.7 Drinkers
Proper drinking space should be provided to birds. It is necessary to provide extra
water during summer and extremely hot weather. Generally, one large drinker is
sufficient for 50 birds. The feasibility study has therefore taken 100 large drinkers
and 50 small drinkers.
4.8 Litter
Litter is spread on the floor to prevent the direct contact with the floor. Straw, rice-
husk and sawdust are generally used for making the litter. It should be dry and free
of moulds. Caked or moldy material should be removed and refilled with fresh
materials. Extensively wet and dusty litter should also not be used. Using new litter
for each flock is good for raising disease-free broiler. Litter can also be resold in the
market.
4.9 Vaccination
Vaccination can be applied to chicks through injections. The medicine can also be
mixed in the water and also through eye. Vaccination is provided to the birds once in
the rearing period and once in the laying period. Average vaccination cost per bird
usually varies between Rs 2-4. The feasibility study has taken vaccination cost at Rs
3 per bird.
4.11 Culling
Culling is the procedure of selection and rejection of unproductive and poor
producers. Culling is a very important job for running layer farm profitably. Poor
layer should be culled to minimize the cost of production. The birds that have laid
well for short period but have stopped laying for one reason or another should be
culled out. In the feasibility study the culled birds are sold at a rate of Rs. 20 per
bird.
1 4.5 7.5 0 1 1 2 2 2
2 4.5 6.5 1 1 2 2 2 2
3 0 11.5 1 0 1 0 1 0
4 4.5 7.5 0 1 1 2 2 2
5 4.5 6.5 1 1 2 2 2 2
6 0 11.5 1 0 1 0 1 0
7 4.5 7.5 0 1 1 2 2 2
8 4.5 6.5 1 1 2 2 2 2
9 0 11.5 1 0 1 0 1 0
10 4.5 7.5 0 1 1 2 2 2
8
5 MANPOWER REQUIREMENTS
One person can handle 3000 birds easily. Two persons are sufficient to look after the
5000 birds. The feasibility has taken 2 attendants; each attendant will be paid a
monthly salary of Rs 2,500.
6 FARM MACHINERY
10
8 PROJECT COST
11
Sale price of eggs fluctuates during a year. Generally, the sale price of eggs is lower
in summer season and higher in winter season. The entrepreneur should be well
aware of this price fluctuation. This will help the entrepreneur to negotiate well the
sale price of eggs.
• Vaccination and Medication
Mortality is the most critical component in determining the viability of a Layer farm.
Some times the epidemic diseases results in heavy mortality of up to 25%. Proper
vaccination and medication is very helpful to reduce the mortality loss up to 5%.
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11 FINANCIAL ANALYSIS
S a le s 1 ,5 1 0 ,3 6 1 1 ,5 4 6 ,6 8 7 2 ,9 1 2 ,4 6 8 2 ,0 1 2 ,2 8 7 2 ,0 5 8 ,6 4 0 3 ,8 7 6 ,4 9 6 2 ,6 7 8 ,3 5 4 2 ,7 4 0 ,0 5 0 5 ,1 5 9 ,6 1 6 3 ,5 6 4 ,8 9 0
C o st o f g o o d s s o ld
R a w M a te ria l 1 ,4 3 6 ,5 2 6 1 ,3 6 8 ,8 4 1 1 ,6 8 4 ,5 8 7 1 ,6 4 5 ,8 6 8 1 ,5 8 4 ,6 0 5 1 ,9 5 0 ,1 2 1 1 ,9 2 5 ,0 8 2 1 ,8 3 4 ,3 7 8 2 ,2 5 7 ,5 0 8 2 ,2 2 8 ,5 2 3
P a yro ll (P ro d u c tio n S ta ff) 6 0 ,0 0 0 6 3 ,0 0 0 6 6 ,1 5 0 6 9 ,4 5 8 7 2 ,9 3 0 7 6 ,5 7 7 8 0 ,4 0 6 8 4 ,4 2 6 8 8 ,6 4 7 9 3 ,0 8 0
B ro o d in g E x p e n se 5 ,0 0 0 5 ,2 5 0 - 5 ,7 8 8 6 ,0 7 8 - 6 ,7 0 0 7 ,0 3 6 - 7 ,7 5 7
T o ta l 1 ,5 0 1 ,5 2 6 1 ,4 3 7 ,0 9 1 1 ,7 5 0 ,7 3 7 1 ,7 2 1 ,1 1 3 1 ,6 6 3 ,6 1 3 2 ,0 2 6 ,6 9 7 2 ,0 1 2 ,1 8 8 1 ,9 2 5 ,8 4 0 2 ,3 4 6 ,1 5 6 2 ,3 2 9 ,3 5 9
G r o s s P r o fit 8 ,8 3 6 1 0 9 ,5 9 5 1 ,1 6 1 ,7 3 1 2 9 1 ,1 7 4 3 9 5 ,0 2 7 1 ,8 4 9 ,7 9 8 6 6 6 ,1 6 7 8 1 4 ,2 1 0 2 ,8 1 3 ,4 6 0 1 ,2 3 5 ,5 3 1
O p e r a tin g E x p e n s e s
L itte r C o s t 5 ,0 0 0 5 ,2 5 0 - 5 ,7 8 8 6 ,0 7 8 - 6 ,7 0 0 7 ,0 3 6 - 7 ,7 5 7
S p ra y C o s t 2 ,5 0 0 2 ,6 2 5 1 ,3 7 8 2 ,8 9 4 3 ,0 3 9 1 ,5 9 5 3 ,3 5 0 3 ,5 1 8 1 ,8 4 7 3 ,8 7 8
F ix e d e le c tric ity 2 4 ,0 0 0 2 6 ,4 0 0 2 9 ,0 4 0 3 1 ,9 4 4 3 5 ,1 3 8 3 8 ,6 5 2 4 2 ,5 1 7 4 6 ,7 6 9 5 1 ,4 4 6 5 6 ,5 9 1
A d m in istra tiv e O v e rh e a d s 7 ,5 5 2 7 ,7 3 3 1 4 ,5 6 2 1 0 ,0 6 1 1 0 ,2 9 3 1 9 ,3 8 2 1 3 ,3 9 2 1 3 ,7 0 0 2 5 ,7 9 8 1 7 ,8 2 4
D e p re c ia tio n 6 ,2 0 0 6 ,2 0 0 6 ,2 0 0 6 ,2 0 0 6 ,2 0 0 6 ,2 0 0 6 ,2 0 0 6 ,2 0 0 6 ,2 0 0 6 ,2 0 0
M o rtility L o s s 2 4 ,5 4 0 2 4 ,2 8 6 1 7 ,7 3 2 2 8 ,3 6 9 2 8 ,0 7 5 2 0 ,5 2 8 3 2 ,8 0 1 3 2 ,4 6 1 2 3 ,7 6 3 3 7 ,9 3 2
T o ta l 6 9 ,7 9 2 7 2 ,4 9 4 6 8 ,9 1 3 8 5 ,2 5 6 8 8 ,8 2 3 8 6 ,3 5 8 1 0 4 ,9 6 1 1 0 9 ,6 8 3 1 0 9 ,0 5 4 1 3 0 ,1 8 2
O p e r a tin g P r o fit (6 0 ,9 5 6 ) 3 7 ,1 0 1 1 ,0 9 2 ,8 1 8 2 0 5 ,9 1 7 3 0 6 ,2 0 4 1 ,7 6 3 ,4 4 0 5 6 1 ,2 0 6 7 0 4 ,5 2 6 2 ,7 0 4 ,4 0 6 1 ,1 0 5 ,3 4 9
N o n -o p e r a tin g E x p e n s e s
F in a n c ia l C h a rg e s o n R u n n in g F in a n c e 2 8 ,0 1 8 8 3 ,4 0 5 1 1 8 ,6 0 7 2 9 ,7 0 0 1 2 ,4 3 5 - - - - -
B u ild in g R e n t 1 2 8 ,6 1 6 1 3 5 ,0 4 7 1 4 1 ,7 9 9 1 4 8 ,8 8 9 1 5 6 ,3 3 4 1 6 4 ,1 5 0 1 7 2 ,3 5 8 1 8 0 ,9 7 6 1 9 0 ,0 2 4 1 9 9 ,5 2 6
T o ta l 1 5 6 ,6 3 4 2 1 8 ,4 5 1 2 6 0 ,4 0 6 1 7 8 ,5 8 9 1 6 8 ,7 6 9 1 6 4 ,1 5 0 1 7 2 ,3 5 8 1 8 0 ,9 7 6 1 9 0 ,0 2 4 1 9 9 ,5 2 6
P r o fit B e fo r e T a x (2 1 7 ,5 9 1 ) (1 8 1 ,3 5 1 ) 8 3 2 ,4 1 2 2 7 ,3 2 8 1 3 7 ,4 3 5 1 ,5 9 9 ,2 9 0 3 8 8 ,8 4 8 5 2 3 ,5 5 1 2 ,5 1 4 ,3 8 1 9 0 5 ,8 2 3
T ax - - 1 6 6 ,3 4 4 - 5 ,8 0 8 4 3 4 ,7 5 2 4 3 ,2 7 0 7 6 ,3 8 8 7 5 5 ,0 3 3 1 9 2 ,0 3 8
P r o fit A fte r T a x (2 1 7 ,5 9 1 ) (1 8 1 ,3 5 1 ) 6 6 6 ,0 6 8 2 7 ,3 2 8 1 3 1 ,6 2 8 1 ,1 6 4 ,5 3 9 3 4 5 ,5 7 8 4 4 7 ,1 6 3 1 ,7 5 9 ,3 4 8 7 1 3 ,7 8 5
R e ta in e d E a rn in g s b e g in n in g o f ye a r - (2 1 7 ,5 9 1 ) (3 9 8 ,9 4 1 ) 2 6 7 ,1 2 7 2 9 4 ,4 5 5 4 2 6 ,0 8 2 1 ,5 9 0 ,6 2 1 1 ,9 3 6 ,1 9 9 2 ,3 8 3 ,3 6 2 4 ,1 4 2 ,7 1 0
R e ta in e d E a rn in g s e n d o f ye a r (2 1 7 ,5 9 1 ) (3 9 8 ,9 4 1 ) 2 6 7 ,1 2 7 2 9 4 ,4 5 5 4 2 6 ,0 8 2 1 ,5 9 0 ,6 2 1 1 ,9 3 6 ,1 9 9 2 ,3 8 3 ,3 6 2 4 ,1 4 2 ,7 1 0 4 ,8 5 6 ,4 9 5
13
Operating activities
Net profit (217,591) (181,351) 666,068 27,328 131,628 1,164,539 345,578 447,163 1,759,348 713,785
Depreciation 6,200 6,200 6,200 6,200 6,200 6,200 6,200 6,200 6,200 6,200
Accounts receivable (125,863) (3,027) (113,815) 75,015 (3,863) (151,488) 99,845 (5,141) (201,630) 132,894
Stocks-RM (159,614) 7,520 (35,083) 4,302 6,807 (40,613) 2,782 10,078 (47,014) 3,221 247,614
Cash provided by operations (159,614) (329,734) (213,261) 562,755 115,350 93,352 1,022,033 461,702 401,207 1,567,138 1,100,493
Financing acivities
Add: buliding rent expense 128,616 135,047 141,799 148,889 156,334 164,150 172,358 180,976 190,024 199,526
Building rent payment (128,616) (135,047) (141,799) (148,889) (156,334) (164,150) (172,358) (180,976) (190,024) (199,526) (209,502)
Repayment of Running Finance (175,115) (521,279) (741,292) (185,627) (77,722) 0 0 0 0 0
Issuance of share 175,115
Cash provided by/used for financing activities 46,499 (181,546) (528,032) (748,382) (193,072) (85,539) (8,208) (8,618) (9,049) (9,501) (9,976)
Total (113,115) (511,279) (741,292) (185,627) (77,722) 7,814 1,013,825 453,084 392,159 1,557,637 1,090,516
Investing activities
Capital expenditure (62,000)
Cash provided by/used for invetsing activities (62,000)
Net Cash (175,115) (511,279) (741,292) (185,627) (77,722) 7,814 1,013,825 453,084 392,159 1,557,637 1,090,516
Cash balance brought forward 0 0 10,000 10,000 10,000 10,000 17,814 1,031,639 1,484,722 1,876,881 3,434,518
Cash Balance (175,115) (511,279) (731,292) (175,627) (67,722) 17,814 1,031,639 1,484,722 1,876,881 3,434,518 4,525,034
Running Finance 175,115 521,279 741,292 185,627 77,722 0 0 0 0 0 0
Cash carried forward - 10,000 10,000 10,000 10,000 17,814 1,031,639 1,484,722 1,876,881 3,434,518 4,525,034
14
Current Assets
Cash 0 10,000 10,000 10,000 10,000 17,814 1,031,639 1,484,722 1,876,881 3,434,518 4,525,034
Stocks and Inventory 159,614 152,093 187,176 182,874 176,067 216,680 213,898 203,820 250,834 247,614 0
Receivable 0 125,863 128,891 242,706 167,691 171,553 323,041 223,196 228,337 429,968 297,074
Pre-paid building rent 128,616 135,047 141,799 148,889 156,334 164,150 172,358 180,976 190,024 199,526 209,502
Total 288,230 423,004 467,866 584,469 510,091 570,197 1,740,936 2,092,714 2,546,077 4,311,625 5,031,610
Gross Fixed Assets 62,000 62,000 62,000 62,000 62,000 62,000 62,000 62,000 62,000 62,000 62,000
Less: Accumulated depreciation 0 6,200 12,400 18,600 24,800 31,000 37,200 43,400 49,600 55,800 62,000
Net Fixed Assets 62,000 55,800 49,600 43,400 37,200 31,000 24,800 18,600 12,400 6,200 0
Total Assets 350,230 478,804 517,466 627,869 547,291 601,197 1,765,736 2,111,314 2,558,477 4,317,825 5,031,610
Current Liabilities
Running Finance 175,115 521,279 741,292 185,627 77,722 0 0 0 0 0 0
Total 175,115 521,279 741,292 185,627 77,722 0 0 0 0 0 0
Equity
Paid-up Capital 175,115 175,115 175,115 175,115 175,115 175,115 175,115 175,115 175,115 175,115 175,115
Retained Earnings 0 (217,591) (398,941) 267,127 294,455 426,082 1,590,621 1,936,199 2,383,362 4,142,710 4,856,495
Total 175,115 (42,476) (223,826) 442,242 469,570 601,197 1,765,736 2,111,314 2,558,477 4,317,825 5,031,610
Total Liabilities And Equity 350,230 478,804 517,466 627,869 547,291 601,197 1,765,736 2,111,314 2,558,477 4,317,825 5,031,610
15
12 KEY ASSUMPTIONS
16
17